October 17, 2010

Sugar, a centuries-old pillar of the $10 billion economy of the Indian Ocean island of Mauritius, accounts for roughly 3 percent of gross domestic product and is a major employer.
"The sugar industry can co-exist with property development and energy production but land abandonment by small planters represents a threat to the industry," said Cyril Mayer, CEO of Harel Frere, a sugar manufacturer and property developer.

Mayer said unless the price of sugar per tonne rose to 15,000 Mauritius rupees ($502) from 12,700 rupees currently, small planters will continue to leave sugar cane cultivation.

The Chamber of Agriculture said in June Mauritius sugar output will fall to 450,000 tonnes this year from 467,234 tonnes in 2009 largely due to a reduced area under cultivation.

The country has been losing about 2,200 hectares of sugar cane fields annually. In 2009, it lost 1,900 hectares and the forecast is maintained for this year.

Sugar producers have been hit hard after the European Union cut its guaranteed price for African, Caribbean and Pacific (ACP) sugar by 36 percent. The final tranche took effect last October.

"I am confident that we will achieve rapidly the 15,000 rupees per tonne of sugar. We should continue to implement the sugar sector reform programme and also keep on cutting cost," said Jacques d'Unienville, CEO of Omnicane, a leading producer.

He said a Bank of Mauritius decision to slash the key interest by 1 percentage point will also help the industry by containing the appreciation of the rupee against the euro.

Large-scale producers are diversifying their revenue by producing electricity and ethanol and have shed human labour for machines. But small-scale farmers have found it harder to cope.

Omnicane said it will produce between 175,000 and 180,000 tonnes of refined sugar in 2011 up from 100 000 tonnes this year as it refinery reached cruising speed.

D'Uniemville said Omnicane also sees big potential in ethanol production.

"Last year Mauritius exported 100,000 tonnes of molasses. I think we could use some 80,000 tonnes of it to produce 20 million litres of ethanol.

"Mauritius imports around 125,000 litres of gasoline per year. We could use a percentage of the ethanol produced locally as additive to the gasoline. Tests have already been conducted and it showed it can be done," he said.

Cyril Mayer said Mauritius which produces 18 percent of its power from burning bagasse, the waste generated when crushing sugar cane, can increase this production to 25 percent by 2025.

"What we need is to develop and spread high fibre content sugar cane around the island. Our neighbour Reunion island is already doing it," he said.